general motors - All posts tagged general motors

Do you hear that sputtering sound, sort of like a clogged fuel line? Well, that’s the sound of U.S. auto sales, which slipped in September. In fact, according to a report by the WSJ, four of the biggest six sellers in the U.S. posted declines from the same period a year ago.

While the pace of sales remains historically strong, dealership traffic is leveling off after more than six years of steady growth…Retail demand has cooled from a robust clip set in the final six months of 2015. To keep volumes near last year’s record 17.5 million and North American factories humming, auto makers have cranked up spending on rebates and discounts and relied more heavily on fleet customers, including rental-car firms, government agencies and commercial clients.

Industry players spent nearly $400 more on incentives per vehicle on average in September compared with the same month in 2015, and $3,888 per-unit sold on average tops the prior record incentive-spending level for a single month set in December 2008, according to J.D. Power. The last time incentives-per-unit were this high, GM and Chrysler were appealing to Congress for bailouts and sales across the industry were sinking.

Morgan Stanley (MS) has stopped growling at General Motors (GM). The U.S. automaker’s stock got an upgrade to equalweight from underweight by Adam Jones and his team of analysts at Morgan Stanley who argue that there are changes to the core business that could significantly alter the investor narrative.

While presenting at a industry event in Detroit, the automobile giant unveiled plans to boost capital spending to $9 billion — a 20% rise — this year. That comes even as the company shells out $1.2 billion for recall costs.

GM expects to boost profits this year, but investments needed to create new products and pay for quality problems will cap free cash flow, with GM projecting it will be “relatively flat” with 2014.The outlook is a setback for investors looking to benefit from GM’s recent fortunes via fatter dividends or stock buybacks. Strong U.S. demand for trucks and SUVs lined the auto maker’s pockets in 2014, with North American operating margins at 9.5% in the most recent quarter, and GM Chief Financial Officer Chuck Stevens said last year’s results—to be reported in February—were “much better” than what had been expected at the start of the year.

The Detroit-based car maker announced Thursday three new safety recalls covering more than 83,780 large SUVs and pickup trucks, lifting the number of recall campaigns disclosed last year to 84.

The recalls overshadowed effort by GM to strengthen its balance sheet, sending the stock falling 0.66% to $34.68.

Yesterday, GM said it redeemed 156.1 million outstanding shares of preferred stock at a cost of $3.9 billion, allowing the Detroit-based company to replace higher-cost Series A preferred shares with lower-cost debt. The company will, however, take a one-time charge of $800 million in the fourth quarter. GM signaled in November it would make such a move by the end of the year.

The big comeback the Dow enjoyed on Wednesday got flushed away today, and strategists have few simple answers to explain the blood bath.

U.S. stocks tumbled sharply amid worries about global growth and political tensions, ending with the Dow Jones Industrial Average suffering its biggest one-day loss since July.

The Dow sank 264 points, or 1.54%, to end the day at 16,945, while the S&P 500 fell 32 points, or 1.62%, to close at 1965.99.

The Nasdaq Composite, meanwhile, fell 88.47 points, or 1.9% to close at 4,466.75.

What’s to blame? Take you pick of issues from the conflict in Syria and worries about Russia seizing foreign assets to concerns about the global economy, U.S. interest rates and weak durable goods orders.

Regardless, investors fled from stocks, opting to play it safe with Treasuries. The yield on the 10-year note fell to TK as prices rose.

Ford (F) and General Motors (GM) delivered vehicle sales in November that exceeded or met analysts’ expectations. So why are the stocks taking a hit today?

Oil prices spiked – never good news for automobile makers. But more importantly, Ford warned that its North American production will slip 1.8% in the first quarter of 2014 amid rising inventories.

Automakers entered their year-end sales push last month with their biggest supply of cars and trucks in eight years. If buyers don’t absorb enough supply, more automakers, may need to follow Ford in trimming output to avoid margin-slicing discounts.

General Motors (GM) and Ford (F) both have compelling valuations. UBS analyst Colin Langan, however, sees preferences on the Street shifting towards GM, arguing that the U.S. auto giant has more positive catalysts over the next six months.

In a note published today, Langan writes:

…GMNA margins should benefit from the full-size pickup ramp up, with margins likely peeking in Q2 or Q3 post the Q1 heavy duty and SUV launch. Moreover, it is increasingly likely that GM will return cash to shareholders given excess liquidity and recent management comments.

It’s an opinion Barrons.com shares. Last month, Senior Editor Dimitra Defotisweighed in bullishly on General Motors after the company reported that EBITDA generated during the third quarter beat expectations and showcased strong North America vehicle sales, especially trucks.

But that’s not to say we haven’t take Ford for a drive. In June, another Barrons.com colleague, Teresa Rivas said Ford was in the fast lane, arguing that strong vehicle sales demonstrated that the automaker was primed for gains.

Today, shares of GM rose 0.2% to $37.71, after rising roughly 54% over the last 12 months. Ford, meanwhile, rose a similar pace over the last year. Today, the shares fell 0.32% to $16.95.

But UBS’s Langan predicts that 2014 will be a transition year for Ford as it launches its new full-size pick-up truck next summer. That means rising costs, at the same time GM trucks will be increasingly available, allowing the company to pressure Ford’s market share and pricing.

Langan added:

While we expect improved profits in Europe, the close to $1bn in savings from the Genk plant closure will largely be a 2015 benefit as it closes near 2014-end. That said, Ford is setting up for an unprecedented 2015 given the new F-150 pickup launch and EU restructuring savings. The new pickup will reportedly have dramatic styling changes and include more aluminum content, which should result in superior fuel economy and performance relative to peers.

The trading day ended in the green for the U.S. stock market, with the Dow Jones Industrial Average and the S&P 500 erasing earlier losses to inch higher at the closing bell.

The Dow rose 13.4 points or 0.09% to close at 15,555.76. The S&P 500 rose 4.3 points, or 0.26% to close at 1,690.26.

And the Nasdaq Composite rose 23.3 points, or 0.0.65% to close at 3,602.88, getting a big boost from Facebook (FB). Shares of the social networking company surged almost 30% to close at $34.35 after the company reported better-than-expected earnings as it grows its mobile advertising business.

Key indexes sat near recent records. And corporate earnings reports were mixed, with General Motors (GM) and home builders attracting attention.

PulteGroup (PHM) and D.R. Horton (DHI) were among the big losers in the S&P 500 today, falling 10.3% and 8.9% respectively. Pulte reported disappointing earnings and D.R. Horton’s executives revealed on a conference call with analysts that higher mortgage rates have dented sales.

Interest rates on the 10-year Treasury, which is used in determining consumer loan rates, rose to 2.61%.

Figures from the Labor Department had more Americans filing for unemployment benefits last week, with initial claims rising by 7,000 to 343,000.

Separate data from the Commerce Department had orders for durable goods rising 4.2% in June after a revised 5.2% gain the prior month.

Shipments of non-defense capital goods excluding aircraft declined 0.9% in June, with the number used in calculating gross domestic product signaling capital spending might have softened at the end of the second quarter.

The dollar weakened against the currencies of major U.S. trading partners, including the euro.

Crude-oil futures rose nine cents, or 0.08%, at $107 a barrel on the New York Mercantile Exchange. Gold futures added $11.30, or 0.86, to $1,330.8 an ounce.

In other corporate news: Dow component 3M (MMM) fell 1% after the industrial conglomerate reported earnings that matched estimates, though the company was hampered by falling sales of materials used in electronics and solar energy.

General Motors slipped after the auto maker beat earnings and revenue forecasts, though the company reported a 24% drop in quarterly profit from a year earlier.

Trip Advisor(TRIP) jumped 16% after reporting late Wednesday that its quarterly earnings rose 26% as the hotel-reviews site recorded a surge in revenue.

And Crocs (CROX) tumbled 20% the show maker reported late Wednesday a big drop in second-quarter earnings.

During pre-market trading, the stock price rose 2.6% after the auto manufacturer reported second-quarter results that exceeded expectations thanks to strong U.S. demand and smaller losses in Europe.

But now, the shares have relinquished those gains, sliding 0.8% to $36.85, a fall that outpaces the 0.4% drop by the Dow Jones Industrial Average and the 0.15% decline by the S&P 500.

In May, GM reported a stronger-than-expected first-quarter profit as it controlled costs in its North American and European businesses. That grip remained in place in the second quarter in Europe, where the company cut costs by $400 million compared with a year earlier.

GM’s European unit narrowed its loss during thjeprevious quarter to $110 million from $394 million a year earlier. And the broader company earned 84 cents a share, exceeding the 76 cents analysts were expecting. Revenue rose 4% to $39.1 billion from $37.6 billion a year earlier.

Officials admit that Europe remains challenging. GM’s current target is to break even there by mid-decade.

Citigank analyst Itay Michaeli wrote:

Net-net-net, we think investors walk away with a slightly positive reaction on the much narrower Europe losses, relieving results in North America and solid FCF. Although GMIO was clearly soft, the magnitude isn’t dramatic and GM is highlighting initiatives to improve performance. GM shares should see a slightly favorable reaction this morning, in our view.

Profit margins did fall in the second quarter due to due to new vehicle launches. And the company expects to benefit in the second half of 2013 from increased sales of trucks and other high end products.

Smaller U.S. rival Ford (F) on Wednesday also posted a stronger-than-expected second-quarter profit, helped by smaller-than-anticipated losses in Europe

Ford (F) and General Motors (GM) saw large gains today after both companies beat analysts’ earnings expectations and showed surprising strength in North America and elsewhere. Ford rose 8.2% and GM rose 9.5%.

Both companies continued to show weakness in Europe, but the market appears comfortable with their plans to dig themselves out.

GM’s beat was substantial: 93 cents of EPS versus expectations for 60 cents. Vehicle sales rose 1.7% year over year in North America, although profits fell because of higher warranty costs. But the biggest surprise may have been GM’s international results — income of $650 million far outpaced analysts expectations and last year’s $365 million. GM reported particularly surprising strength in South America. Earnings of $114 million beat some analysts’ expectations for profits of about $25 million.

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Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.